The release candidate for Ubuntu 7.10 has been released. "The Ubuntu developers are hurrying to bring you the absolute latest and greatest software that the open source and free software communities have to offer. This is the Ubuntu 7.10 release candidate, which brings a host of excellent new features. We consider this release candidate to be complete, stable and suitable for testing by any user. The final stable version will be released in October 2007."

Why not using the alternate CD for configuration with limited amount of memory ? This uses a text-based installer, and does not require a lot of memory (128 Mb is definitely enough, maybe 64 would do, not sure though, since I have never ubuntu on this configuration). You can also try the server install.

Ubuntu should be perfectly usable with 256 Mb, once installed. Firefox is always a problem, unfortunately, but a basic desktop (with a few removed applets) takes much less than 100 Mb on Gutsy (I noticed gutsy takes less space so far).